|
State denies Exxon’s request to add tract to Point Thomson unit Other major owners tell state Exxon’s request wouldn’t promote development, would dilute other ownership positions Kristen Nelson PNA News Editor
Fellow Point Thomson unit owners twice turned down Exxon’s request to add a single expiring lease to the unit.
Now the state has also turned the company down.
On Nov. 30 the Department of Natural Resources Division of Oil and Gas rejected a request by Exxon Corp. to expand the Point Thomson unit to include an Exxon lease on the unit’s eastern border. The 10-year lease expired Nov. 30. Support for broader expansion Mobil Exploration & Producing U.S. Inc. told the state that in its view Exxon’s action “will establish a valuable precedent and allow any lessee in the Greater Point Thomson Area to make unilateral applications for unit expansions.” With the expansion, Mobil said, “additional Brookian resources could be studied and appraised along with the known Thomson (sands)….” (The adjacent Badami field produces from a Brookian formation.)
In addition, Mobil said: “Sufficient expansion of the PTU could serve to de-bottleneck the PTU voting process, which is virtually controlled at present by one party. Inclusion of additional acreage, reasonably thought to be productive, would have the effect of redistributing the voting percentages based on the new surface areas included within the unit.” (Exxon, the unit operator, presently controls the most acreage in the Point Thomson unit.) Involuntary unitization petition not filed BP Exploration (Alaska) Inc. told the state that it had three concerns about Exxon’s “unilateral application for expansion” of the Point Thomson unit. First, BP said, “Exxon has not filed a petition for involuntary unitization with the Alaska Oil and Gas Conservation Commission…” Second, while including the one additional tract in the unit “may increase the total unitized reserves… (it) will not improve the chances for commercial viability of the field.” BP told the state that the working interest owners “have had numerous discussions concerning the notion that commercial viability of the PTU may require co-development of the Brookian and Point Thomson reserves.” Third, BP told the state, adding the tract “does not provide for the protection of all parties” and “would unduly dilute the unit interest of the PTU working interest owners.”Vision of co-development of Brookian and Thomson reserves Chevron U.S.A. Production Co. said it “shares the vision expressed by both BP and Mobil — that the greatest opportunity for commercial viability of the PTU is co-development of the Brookian and Thomson reserves…”
Chevron said it supports supported expansion of the unit “to include all tracts believed to be underlain by productive Thomson and/or Brookian sands, in lieu of Exxon’s sole least expansion proposal.”
Phillips Petroleum Co. told the state that it supported Exxon’s proposal for expansion of the Point Thomson unit “based on the premise that all leases within the consensus mapped Thomson Sand boundary should be included in the unit.” State denies Exxon’s request The state said Nov. 30 that Exxon has not demonstrated that expanding the unit to include its one lease “is necessary or advisable to protect the public interest.”
Ken Boyd, director of the Division of Oil and Gas, noted in the state’s Nov. 30 decision that Exxon had not won the support of fellow working interest owners to expand the unit.
“DNR agrees,” Boyd said, “that the most economical development of the reserves under the lease would be in conjunction with the development of the Thomson Sand reservoir of the PTU. However,” he noted, “there is currently no production planned … and the expansion application did not include a commitment to explore this lease.”
Reservoir mapping of the Thomson Sand “indicates that it extends beyond the unit area to the northwest as well as on to the eastern lease.” Other Point Thomson working interest owners, the state noted, “prefer a unified expansion of the unit area to encompass the entire reservoir.”
“There is no reason,” the state said, “to include this lease, and not include other leases with similar geologic characteristics other than to warehouse acreage.” State’s interest best served by reoffering lease Exxon might benefit from extension of the lease, but the state would not because the state only benefits from unitization when exploration and development occur earlier than without unitization. The state said that its interests were served when oil and gas leases were developed and royalties paid to the state, but Exxon’s only commitment for the addition of this lease to the unit was to interpret previously purchased seismic data and map the lease. That “is not a sufficient development commitment to expand the unit,” the state said.
While plans of development for the unit have addressed the evaluation and delineation of the Thomson Sand, they have only minimally addressed development of the oil associated with the Thomson Sand, the state said, and have not included plans to develop Brookian oil prospects within the unit area. And, the state said, exploration has been by individual working interest owners and has not been coordinated under the unit plan of development.
“If Exxon has no plans to develop the lease,” the state said, “it would be better for the state to reoffer the acreage in hopes that a new owner would have more aggressive development plans.” With the state’s new areawide oil and gas lease sale program, this lease can be reoffered in the next offshore areawide lease sale scheduled for October 1999. Leases in the Point Thomson area received solid bids in the 1997 sale and, the state said, it is not in its “interest to forego bonus payments that it could receive by offering the acreage for lease while locking up the acreage in the PTU for an indefinite period of time.”
| 